October 3, 2025 - Macquarie is expecting that coking coal prices will eventually climb above $200/tonne in the long term, reaching a more sustainable range driven by emerging cost support, Kallanish notes.

In a recent note, the research house maintains its view that the market will remain in a small surplus, but notes this excess volume is projected to shrink as demand from India accelerates.

Crucially, the current prolonged period of low prices is beginning to force widespread cost-cutting and the closure of marginal mining operations, directly pressuring global supply.

Macquarie has also lowered its forecast for China’s domestic coking coal production from a 3% year-on-year increase to just 1% growth, citing the nation's recent ramp-up in safety inspections.

While the actual output reduction from these inspections is expected to be limited, related news developments will likely continue to exert an outsized influence on futures prices.

In the downstream coke market, coking coal's price strength has pushed through seven rounds of coke price hikes since mid-July. This has successfully reversed coke margins, which were largely negative prior to the rally. Given that margins are now favourable, Macquarie cautions that China's coke production is likely to stay elevated and remains at risk of oversupply.

As for India, the mills appear ready to resume building port stocks following the typical destocking phase during the monsoon season. Macquarie estimates current stock levels in India are at 5.5 million tonnes, equivalent to about 22 days of use and close to the three-year average. The sustainability of India's import strength, however, hinges on the continuation of coke Quality Restriction (QR) policies next year.